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September 29, 2008

COMSTAR Increases Data Transmission Speed By Three Times to 20 Mb/Sec and Launches HDTV

by Sam Savage

"COMSTAR - United TeleSystems" JSC ("Comstar" or "the Group") (LSE:CMST), the largest integrated telecommunications provider in Moscow and 67 Russian cities, has introduced new speed tariff plans, allowing for the data transmission speed of up to 20 Megabits per second, and fully launched 'STREAM' branded High-Definition Television ("HDTV") services in Moscow in the modernized parts of the MGTS network.

The offering of broadband internet access with the data transmission speed of 20 Megabits per second and HDTV services was enabled by the ongoing modernization of the MGTS network. The two year network modernization programme launched in February 2008 is modernizing MGTS' unique 'last mile access' using fiber-to-the-curb technology. At present, equipment had been installed in more than 200 curbs out of total 3,000 curbs which will be modernized by the end of 2009.

The tariff plans for the broadband internet access with the data transmission speed of 15 Megabits per second and 20 Megabits per second are offered for subscription fees of RUB 900 (US$ 36) per month and RUB 1,000 (US$ 40) per month respectively. In addition, Comstar launched HDTV package comprising three pay-TV channels - MelodyZen (the relaxation channel), Voom TV (the multi-themed channel) and Luxe TV (the luxury lifestyle and fashion channel) for RUB 200 (US$ 8). Comstar also started offering video-on-demand of HD quality for RUB 100 (US$ 4) per movie. The Group launched additional bundle service offerings, e.g. broadband internet access with the data transmission speed of 10 Megabits per second, IP-TV and HDTV packages for RUB 1,250 (US$ 50).

Sergey Pridantsev, President and Chief Executive Officer of Comstar UTS, commented: "The introduction of higher priced tariffs is in line with the move to the second phase of our broadband strategy following a rapid increase in broadband subscriber base in Moscow. We can already see the first results of the ongoing modernization of the MGTS network. We have increased the maximum data transmission speed by three times and enabled our subscribers to fully enjoy the technical possibilities of the TV sets which support the HD format. We expect to provide the access to these new services to up to 80% of Comstar subscribers in Moscow next year."

Sergey Nazarov, Comstar's Vice President for Marketing, added: "HDTV is the television format of the future and is a revolutionary step in the development of television, with HDTV viewers enjoying a superior picture quality. We are pleased that the ongoing network modernization has enabled us to offer this additional service, and we fully intend to expand the number of HDTV channels with an enhanced range of packages."

For further information, please visit www.comstar-uts.com

Comstar - UTS is the leading fixed-line telecommunications company in Moscow. Comstar provides voice, data, television and other value-added services to residential and corporate subscribers and operators, using its extensive backbone network and exclusive last mile access to 97% of Moscow households. The Company also offers communications services in five Russian regions, Armenia and Ukraine. Comstar had 3.6 million residential subscribers and 783 thousand residential broadband internet subscribers in Moscow, as well as 49 thousand residential regional and international broadband internet subscribers at the end of June 2008. Comstar generated US$ 834.2 million of revenues and a 39.5% OIBDA margin for the six months ended June 30, 2008. Comstar's Global Depositary Receipts are listed on the London Stock Exchange (ticker: CMST).

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Comstar UTS. You can identify forward looking statements by terms such as "expect,""believe,""anticipate,""estimate,""intend,""will,""could,""may" or "might", the negative of such terms or other similar expressions. Comstar UTS wishes to caution that these statements are only predictions, and that actual events or results may differ materially. Comstar UTS does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Comstar UTS, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries Comstar UTS operates in, as well as many other risks specifically related to Comstar UTS and its operations.